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This report is written with the purpose of determining and understanding the environmental factors that affect PricewaterhouseCoopers (PwC) Malaysia, and how the HRM manager deal with the environmental factors by applying theoretic and practical aspect of Strategic Human Resource Management (SHRM).
PwC Malaysia is one of the top firms in Malaysian services industry. It is a large firm with 7 offices located in different states of Malaysia and employee base of more than 1,800 individuals.
PwC Malaysia mainly involves in providing professional services on tax, assurance and advisory with the purpose of solving complex business issues for the customers. In the accounting services industry, it established itself as one of the largest and most successful (Certified Public Accounting) CPA firms in Malaysia.
Currently, PwC Malaysia is influenced by the external environmental factors which are the staff turnover issue and GST implementation in the coming future. The main HR problem for staff turnover issue is the poor job satisfaction among accounting professionals while the major HR issue for GST implementation is the shortage of skilled-workers in dealing with GST. Therefore, this has raised the need for PwC Malaysia to implement effective HRM in respond to both these external environmental factors.
Introduction to PwC Malaysia
PricewaterhouseCoopers (PwC) is a global network which consists of many member firms from different countries including PwC Malaysia.
For years, PwC Malaysia remains as one of the top firms in Malaysian services industry. It is a large firm with 7 offices located in Kuala Lumpur, Pulau Pinang, Melaka, Ipoh, Johor Bahru, Labuan as well as Kuching of Malaysia. In PwC Malaysia, there are more than 100 directors, 300 managers and 1800 employees who are responsible for carrying out the business function.
Since year 1990, PwC Malaysia has played a vital role in assisting the growth of Malaysia. It mainly involves in providing professional services on tax, assurance, and advisory with the purpose of solving complex business issues for the customers. In the accounting services industry, PwC Malaysia has established itself as one of the largest and most successful Certified Public Accountant (CPA) firms in Malaysia. Currently, it is responsible for auditing 9 out of top 20 companies from Bursa Malaysia. Besides rendering professional services, PwC Malaysia has carried out its commitment either to the people or environment throughout the world. It performs its commitment in accordance to the highest ethical standard for the purpose of gaining competitive advantage, enhancing the value of customers as well as stakeholders.
HR-oriented External Environment
High Staff Turnover in the Labor Market
In recent years, high staff turnover has been the major concern for CPA firms across the world. This was proven when maintaining existing staff and searching for new staffs was the leading issue faced by CPA firms in year 2003, 2005 and 2007 (Aicpa, n.d.).High staff turnover appears to be the tradition of labor market among CPA firms for the past few years and the result is still critical now. A latest survey in year 2009 claimed that maintaining staffs was currently one of the top five challenges faced by firms with 6 or more CPAs (Aicpa, n.d.).
The staff turnover issue has created an adverse impact on PwC Malaysia. It could lead PwC Malaysia to lower efficiency either in terms of improving business performance or achieving business growth. For instance, PwC Malaysia will be exposed to skill shortage problem resulting from the exit of expertise or knowledgeable individuals. This in turn causes PwC Malaysia to face short period of operational risk due to the lack of skilled-workers to continue conducting the business operation. Yet, PwC Malaysia may loss its profitable customers since these clients tend to follow where the staffs go. Additionally, PwC Malaysia could incur additional cost for training new staffs in order to meet the unexpected demand of customers. .
The staff turnover issue has raised the need for implementing effective human resource management (HRM). Basically, HRM is about the practice which helps attracting, retaining and training individuals (Shonhiwo &Gilmore, 1996, p. 16). Therefore, implementing effective human resource (HR) practice can assist in easing employees' demand of quitting their workplaces.
GST Implementation in the Coming Future
Legal environment which is another external factor that needs to be considered in formulating HR strategies and practices. In year 2009, a survey reported that tax reform is presently one of the top three issues faced by all CPA firms (Aicpa, n.d.). During year 2010, Malaysian government has announced its intention to implement Goods and Services Tax (GST) as the replacement of existing Sales and Services Tax (SST) by the mid-year 2010.
The GST implementation has created an opportunity for PwC Malaysia in the near future. This is because the consultancy services for clients will be extended to preparation of GST return, adjustment of GST error and GST Audit Assistance. This as a result may boost PwC Malaysia's business performance.
Such business expansion has a profound implication on HRM. HR practice is able to enhance the business performance of firms by providing them with competitive advantage over their rivals (Collins & Clark, 2003, p.740). This in turn will help the firms to attain growth and accomplish their goals. Hence, HR practice is said to be the key success for PwC Malaysia in the future.
HR Problems Arising from the Labor Market (Employee Turnover)
Accounting professionals are regarded as one of the most important assets for PwC Malaysia in carrying out its business function.
For years, high employee turnover has been the main issue faced by PwC Malaysia. Job satisfaction among public accountants is found to be the primary factor affecting the employee turnover issue. Normally, public accountants voluntarily quit their workplaces as they fail to gain any promotion prospects (Moyes, Shao, Newsome, 2008, p.66). When there are new advancement opportunities, public accountants will immediately leave their existing workplaces in order to achieve a better job satisfaction.
Job stress among employees is reported to be another factor influencing the staff turnover issue. Job stress is a determinant of job satisfaction (Colbert, Mossholder, Bedain, 2007). Accountants from CPA firms will usually voluntarily leave their current workplaces resulting from high extent of job stress. Job stress occurs as a result of employees' capabilities fail to meet the workplace demand. Public accountants are found to possess higher degree of job stress in comparison to those in private accounting firms. This is because public accountants are exposed to higher workload and job expectation (Moyes et al, 2008, p.66). For instance, they are required to travel more frequently than others for carrying out their tasks. In addition, their working hours are long and inconsistent. Furthermore, they have to work on Sunday during the tax season. These in turn lead to work-family conflict since they spend a little time with their families now. As a result, public accountants will voluntarily quit their current workplaces for achieve better job satisfaction.
From the above evidences, job satisfaction is the major factor leading to high staff turnover in CPA firms.
Based on Maslow Hierarchy of Needs Theory, employees' attitude and reaction towards their organizations are motivated by 5 basic needs (Ramlall, 2004, p. 54):
Physiological- demand for primary need, e.g. financial compensation, cafeteria
Safety- demand for security and protection from fear, e.g. wages and salaries, fringe benefits, working condition, rest periods
Affiliation- demand for love and affection, e.g. respect from co-workers and managers, allow participation
Self-esteem- demand for achievement, e.g. recognition, training
Self-actualization- demand for achieving one's full potential, e.g. challenging tasks, creativity
An organization possesses the responsibility to fulfill each of the 5 basic needs of employees. A failure in doing this will cause low job satisfaction among employees and thus bring to voluntarily staff turnover in workplaces (Ramlall, 2004, p. 54).
From the problems of staff turnover issue, public accountants are found to be lack of safety need (excessive workload) and self-esteem need (failure to gain promotion prospect) from the Maslow Hierarchy of Needs Theory. Therefore, PwC Malaysia should focuses on satisfying the safety and self-esteem needs of staff in turn to curb the employee turnover issue. For instance, PwC Malaysia could establish programs aiming to stabilize the work life balance among employees. According to Porter and Lawler's Extension, the job satisfaction of employees can be accessed via the reward they get (Ramlall, 2004, p. 56). Yet, it may provide intrinsic reward such as work-life benefits and advancement opportunities to motivate its staff to stay in the workplace.
HR Problems Arising from the Legal Environment (GST Implementation)
The main HR problem PwC Malaysia face for GST implementation is the shortage of skilled-workers in dealing with GST. Such problem arises since this is the first time Malaysia going to implement GST. The existing problem of staff shortage will be compounded in the near future when the implementation of GST is effective. Another HR problem is that staff need to be trained on the features and working of GST to ensure they have relevant knowledge to meet the demand of clients.
PwC Malaysia is needed to acquire and manage the new knowledge associated with GST in order to seize the new business opportunity. First, PwC Malaysia must recruit and retain the staff accountants who are expertise in GST. According to the resource-based theory, acquiring and managing human resources efficiently will help a firm gain competitive advantage over its rivals (Colbert, 2004). PwC Malaysia could recruit and retain new GST expertise by providing them with intrinsic or extrinsic rewards. This is in accordance with the content theories which suggest the behaviors of staff towards an organization are motivated by rewards (Hartel & Fujimoto, 2010). Yet, PwC Malaysia might develop its existing staff accountants into future GST expertise via various training and development programs. Training and development will not only enhances organizational effectiveness, but also reduce the staff turnover rate (Dysik & Kuvaas, 2008, p.141). Staff will only voluntarily leave their current workplaces when there is insufficient training and development provided. Furthermore, PwC Malaysia may acquire the new knowledge on GST through organizational learning. Organizational learning is the process of acquiring new knowledge, stharing the knowledge, interpreting the knowledge as well as storing the knowledge (Huber, 1991). PwC Malaysia can gain the new knowledge via organizational learning by examining other organization's practice, learning from their current practice and seek their advices.
Previously, PwC Malaysia has established a WorkLife Plus Program (WLPP) with the purpose of enhancing job satisfaction among staff. WLPP consists of initiatives such flexible work arrangement, time-out and career break for stabilizing between the work and personal lifestyle of staff. However, these initiatives seem to be insufficient to curb the staff turnover issue. Hence, PwC Malaysia should create a new strategy which is to continue enriching its WLPP by incorporating telecommuting into its business operation; or introducing new work-life benefits to the staff.
Telecommuting is a work from home practice with the application of telecommunication technologies such as internet and telephone. Currently, PwC Malaysia has not implemented telecommuting into its business operation yet. By executing such technology, PwC Malaysia can raise the job satisfaction of employees and therefore curb the staff turnover issue. For instance, accountants will travel less since telecommuting enables them to work at home. This in turn reduces the overhead expenses and enhances the operating efficiency of PwC Malaysia as well.
In respond to the GST implementation, PwC Malaysia should build a broader employee base which consists of expertise for handling GST.
HR Practice (Recommendation)
Training and development are practice that improves the effectiveness of HR strategy (Ijose, n.d.). PwC Malaysia must provide special training for its accounting professionals before the execution of telecommuting. This is because its strategy associated with work-life balance will not be effective if the staff know nothing about telecommuting. PwC Malaysia could set up a workshop which consists of technical expertise who are responsible for guiding and educating its staff in using technological tools such as clipboard, Skype or virtual private network. In addition, PwC Malaysia may send its staff to various seminars or talks on telecommuting as a basis to develop them into telecommuters in the future.
Reward is regarded as the key in recruiting and maintaining staff. PwC Malaysia could make its employees feeling more satisfied by providing different work-life benefits to them. PwC Malaysia could provide child care or health care benefits to its employees in order to enrich its work-life balance practice.
PwC Malaysia should provide new training for its accounting professionals in order to create GST expertise. Since the administration and enforcement of GST is under the preview of Customs and Excise Department, PwC Malaysia can request the Customs and Excise Department to conduct training for its employees as the government agency is the position to provide the latest update on the implementation of GST. Besides that, PwC Malaysia can also obtain training assistance from its affiliated companies in Australia or Singapore as the Malaysia's GST model is likely to be similar the one in these countries which have introduced GST for a few years. As the GST is the new field of taxation in Malaysia, a Mentor-Buddy program is necessary for new recruits to look for alternative source for referring to work related problems.
PwC Malaysia could either attract or retain expertise in GST by rendering them with extrinsic rewards such as higher wages and better fringe benefits. Based on equity theory, employees expect not only rewards received should be in accordance with the effort they exhibit, but also in line with what other individuals in the same industry get (Ramlall, 2004). Hence, PwC Malaysia can offer the salary level which is slightly higher than its competitors in order to attract new GST expertise into its firms.